Smart Borrower Blog

Credit Unions Nab Higher Auto Loan Share


Jan 20th, 2016 @ 8:06 PM by Amber Nelson


Offering lower interest rates than competitors, U.S. credit unions grew their share of auto loans in 2015, according to data from the CUNA Mutual Group.

CUNA’s latest Credit Union Trends Report showed that new auto loan balances hit an all-time high of $100 billion as of October 2015, a 1.1 percent increase from the month before and a 16.9 percent jump from a year earlier. The percentage of new auto loans being made through credit unions rose to 4.9 percent, up from 4.5 percent the previous year.

The Report said that credit unions were edging up in market share by offering interest rates that averaged 1.25 percent lower than bank loans.

“Strong consumer fundamentals are driving auto loan growth: an improving labor market, low interest rates, rising wage growth, expanding driving-age population, improving construction activity, low oil prices and better household balance sheets,” KUNA wrote in its report.

Of course, the lion share of auto loans is still going to captive finance companies, but the credit unions traditionally do best among those buying used vehicles. As of October 2015, total credit union-issued used vehicles loans stood at $164.3 billion, up from 13.6 percent the year before.

Part of the rise in credit union auto loans is due to the increase in credit union membership. There were 105.3 million members as of October, up 4.3 percent from October 2014, with membership ranks swelling faster in 2015 than any time in the past 20 years.

“Heading into 2016, with the economic picture continuing to improve, and the Fed adding its own vote of confidence with its recent interest rate hike,” said Steven Rick, chief economist for CUNA Mutual Group, “the outlook is quite strong for credit unions and the hardworking families they serve.”

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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